CAE Q2 Profit Up 8%, Hikes Dividend

(RTTNews) - Canadian aviation-training and simulation products provider CAE Inc. (CAE, CAE.TO) on Wednesday reported an 8 percent increase in profit for the second quarter from last year, as lower costs and improved operating margins helped offset a decline in revenue.

Looking ahead, CAE said that improved operating margins during the second quarter in both its civil and military segments sustains its confidence that performance will be stronger in the second half of the year. In addition, CAE's board of directors approved a one cent increase in the company's dividend to C$0.06 per quarter.

The company's second-quarter net income attributable to equity holders was C$38.3 million or C$0.15 per share, up from C$35.6 million or C$0.14 per share in the same period last year.

On average, ten analysts polled by Thomson Reuters expected the company to report earnings of C$0.15 per share for the quarter. Analysts' estimates typically exclude special items.

However, revenue for the quarter declined 4 percent to C$487.5 million from C$506.5 million in the prior-year period. Analysts had a consensus revenue estimate of C$534.63 million.

Revenue at the company's combined civil segments declined 6 percent to C$269.3 million, while revenue at the company's combined military segments decreased 1 percent to C$191.1 million. Revenue from new core markets declined 4 percent from last year to C$27.1 million.

Cost of sales for the quarter declined 5 percent from the prior-year quarter to C$353.4 million. In addition, the year-ago quarter's results included restructuring, integration and acquisition costs of C$9.5 million.

CAE's total operating profit for the latest quarter increased to C$65.2 million from C$64.0 million in the prior-year period, while operating margin improved 80 basis points to 13.4 percent.

Backlog at the end of the second quarter was C$3.94 billion, up from C$3.56 billion in the same period of the prior year.

Marc Parent, CAE's President and Chief Executive Officer of CAE said, "Our operational focus yielded strong free cash flow in the quarter of nearly $120 million, which enabled us to reduce net debt below 40% of capital. We achieved a book-to-sales ratio of 1.47 on solid order intake and our backlog reached $3.9 billion. This includes a record $2 billion backlog in Civil, which is indicative of our sector leadership within a robust aerospace market."

CAE said it received 13 civil full-flight simulator or FFS orders in the second quarter and has since sold another 5, bringing the company's FFS sales to 33 for the year-to-date period.

CAE also said it will increase its quarterly dividend to C$0.06 per share, effective December 31, 2013 to shareholders of record at the close of business on December 16, 2013.

In Wednesday's regular session on the NYSE, CAE is trading at $11.05, down $0.45 or 3.91 percent on a volume of 100 shares.